The Unified Methodology for the Assessment of Selected Impacts

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The Unified Methodology for the Assessment of Selected Impacts

What is the Unified Methodology for the Assessment of Selected Impacts for?

The Unified Methodology governs the impact assessment process of new regulations that are being adopted. Impact assessment is a tool whose aim is the determination and quantification of the expected impacts of materials of legislative and non-legislative nature submitted to the preliminary comment procedure. Assessment of impacts entails impacts on public finance, social impacts, impacts on employment, businesses, environment, IT services, services of the public sector for citizens. This tool is an aid for political decision-making but it is certainly not a substitute.

The process of preparation and authorization of impacts has the following stakeholders:

  • Submitter of the material – a ministry or other central government authority with a legislative initiative that submits the material to a preliminary comment procedure,
  • Permanent Working Commission for Assessing Selected Impacts (representatives of ministries, representative of the Government Office of the Slovak Republic, representative of the Slovak Business Agency), whose activity lies in methodological support of the submitter during the impact assessment process,
  • Other entities affected by the proposed material – in particular, business associations, governmental and public organization, NGOs etc.).

How should a legislator proceed if he identifies an impact of the proposed material on the business environment?

Commission assesses the quality of the impact assessment process and the contents of the accompanying impact analysis. The legislator is responsible for elaborating an impact analysis, with the exception of the SME Test. Based on a preliminary assessment of the legislation’s impacts, the Better Regulation Center issues a recommendation to the Ministry of the Economy of the Slovak Republic, which subsequently decides whether the SME Test should be carried out. Consultations are a compulsory part of the business impact assessment and a first step of the SME Test. They should take place in the early stages of preparation of the material, in the case of legal acts even before the actual paragraph version of the material. In accordance with the Unified Methodology the Better Regulation Center recommends the following procedure to legislators that happen to identify an impact of the material on the business environment.

How can an entrepreneur join in the ongoing legislative process?

The Unified Methodology provides entrepreneurs and/or their representative organizations with a unique opportunity to participate in consultations on draft proposals of legislative or non-legislative nature with the respective legislators.

 

The purpose of the consultations is to increase transparency in the preparation of proposals and to allow for involvement of affected businesses in their development. Consultations form a mandatory part of assessing the impact of regulations on business environment. The Ministry of the Economy of the Slovak Republic decides whether consultations with businesses will take place.

Entrepreneurs can participate in this process independently or in cooperation with the Slovak Business Agency, which actively promotes the interests of SMEs and also provides an expert analytical support in measuring the impact of submitted materials on SME.

Interested businesses can reach out directly to the Slovak Business Agency, the submitter of the assessed material or may request to be added on the list of consulting entities, which is compiled by the Ministry of the Economy of the Slovak Republic. Further information regarding the application are available on the Ministry’s web page.

Besides consultations on the Slovak legislation, entrepreneurs have an opportunity to engage in consultations concerning proposals which are an initiative of the European Union bodies even before their transposition or implementation into Slovak legislation. Partners of the Enterprise Europe Network in Slovakia are one of the contact points, where businesses can report their problems or simply point out problematic issues concerning legislation that impacts the business environment in the EU. You can participate in these consultations directly via the Enterprise Europe Network web page. An overview of the ongoing consultations on the upcoming regulation at the EU level, sorted by industry, can also be found on the web page of the European Commission.

BRC assessed tens of nominations – vote for the Bureaucratic Nonsense of the Year 2016

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BRC assessed tens of nominations – vote for the Bureaucratic Nonsense of the Year 2016

Do you sometimes wonder what sort of nonsense is lurking in the Slovak legislation, waiting to attack the unsuspecting entrepreneur? This year, for the 5th time in a row, you have the opportunity to vote for the Bureaucratic nonsense of the year. 10 hottest candidates have been announced lately, yet only one can win this anti-prize whose aim is to direct the attention of policymakers to regulations that unnecessarily complicate the lives of entrepreneurs in Slovakia.

In the BRC we have assessed from a legal perspective and quantified the financial costs of tens of nominations coming from the general public. Among the nominated nonsenses is also the strict liability of the buyer of a service for illegal employment at the provider of the service, which was the subject of our extensive analysis which also included potential alternative solutions.

"Better regulation and removal of nonsensical bureaucracy is undoubtedly a long-distance run. A wide variation of nominations bear witness to the fact that creativeness of the regulators – in a negative sense of word – is prevalent across the whole public sector. The good news is the introduction of new rules for the regulatory process and the establishment of the Better Regulation Centre at the Slovak Business Agency. Let us believe that they both contribute to a reduction in the number of nominations in the coming years,” said Marian Letovanec from the Slovak Business Agency.

BRC welcomes government’s support for self-employers and offers cooperation for better regulation

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BRC welcomes government’s support for self-employers and offers cooperation for better regulation

BRC welcomes the outcome of last week's negotiation of the Government to the amendment of Income Tax Act. Fixed rate expenses for self-employers will increase from the current 40% to 60% and their new maximum ceiling will be 20 000 € instead of current 5040 €. Despite the fact that the previous proposal of the amendment didn't count with this change, the Better Regulation Center in this case already applied principal comment in interdepartmental commenting process reasoned by promises given to self-employers in the Government's Statement of Policy.

In addition, there was a reversal of the tax rate on dividends, which will be eventually 7% instead of the proposed 15%, the act will come into force by 2018 without retroactivity. The Better Regulation Center proposed in the interdepartmental commenting process, as well as in appealing procedure, that the new conception of dividend tax should be reconsidered, both from the bottom and the top ceiling point of view, or the actual rate, since the original proposal sent to the preliminary comment procedure counted with a rate of 10%.  Final rate is deemed as success for all participating business representatives.

The Better Regulation Center welcomes government's willingness to take into account the comments made by entrepreneurs and is open for any type of cooperation with the purpose to modify legislation in order to reduce the regulatory burden on business.

SBA has managed to negotiate a compromise in the regulation of nurseries and babysitters

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SBA has managed to negotiate a compromise in the regulation of nurseries and babysitters

Yesterday, the government approved an amendment to the Act on Social Services, which comes with significant regulation for nurseries and work performance of caregivers for children under three years. The Better Regulation Center (BRC) joined in the commenting procedure of this material and raised several key comments against it.

The result of negotiations with representatives of the Ministry of Labour, Social Affairs and Family of the Slovak Republic are several compromises that soften the new legislation and remove shortcomings, which in practice could result in a large number of problems, not only for the owners of the nurseries, but also for caregivers of children who could essentially end up without of a job.

BRC managed to push through a proposal that will result in saving jobs for nannies who already have a higher age and who are unlikely to obtain relevant education and thus meet the new qualification requirements. After the acceptance of the BRC’s substantive comment, their current practice in the area of child care will be accepted.

The original proposal posed a risk that a caregiver of children, who is obliged to have completed at least a secondary education with graduation, can replace and thus leave number of older people who are dedicated to child care without a job. The amendment proposed by the BRC and later accepted by the Ministry of Labour will enable older nannies to earn some money alongside a pension and it thus protect those who are a few years before retirement and have a low chance to be employed. These people raised several children, have experience in child care, yet had the original proposal remained in place, they could not have met the new requirements.

BRC from the beginning strongly disagreed with the original proposals that a maximum number of 4 children may be allocated to one nursery employee and that at least 80% of all nursery employees are professionals (specialists). Such stringent set of conditions would force the nursery owners to supplement staff or even worse, reduce the capacity of nurseries. Both of these cases would present huge problems for parents – either place a child into a new nursery, or pay extra. Eventually the Ministry of Labour, Social Affairs and Family of the Slovak Republic accepted BRC’s objection and increased the number of children allocated to one nursery employee from 4 to 5 and the proportion of professional staff was slightly decreased to 75%.

BRC is convinced that the proposal of the Act could handle a few more improvements, e.g. removing condition of having a second level university degree for a person who wants to start a nursery or for her responsible manager. This condition is unreasonably strict and there is no guarantee that the person will be a good manager of such a facility. Submitter's argument was that all other social facilities require such a qualification for the responsible manager but that contradicts the Act, which states something else. For instance, it is sufficient for a manager of a shelter for homeless, hospice, along with a person who will provide assistance in personal care for a child or service for reconciliation of family and working life, to obtain full secondary general education.

By adopting the new regulation, considerable expenses for nursery owners and caregivers of children will occur. For instance barriers removal and other space requirements (hundreds of euros), for completing an accredited carer course (about 250 €) or mandatory registration (66 €). In case of the omission fine up to 35 000 € is being risked. Also in this regard, the Ministry could still reconsider the existing alternative proposals in the next phase of the legislative process. We should not overlook the fact that private nurseries or caregivers of children substitute for a long time the government's role in provision and performance of this service.

Therefore, entrepreneurs in the area of child care, among whom are also many small self-employers, should get as much help as possible from the state and not overly burdensome regulation. Entrepreneurs welcomed the need for regulation but the final form is for many of them directly devastating.

99% of the expenses of new obligations for entrepreneurs is due to gold-plating

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99% of the expenses of new obligations for entrepreneurs is due to gold-plating

Since Saturday, 18th June, Slovak entrepreneurs will have new types of responsibilities in the area of posting workers, acceptance of works and services from suppliers, as well as towards visiting staff. These are contained in the new Act on Cross-Border Cooperation in Posting Employees to perform work as part of a service delivery, which amends the Labour Code, the Act on Illegal Employment and the Labour Inspection Act.

BRC's task is to carry out assessment and quantification of the impacts of not only proposed but also of already existing legislation with a focus on SMEs. Assessment of the gold-plating effect is a part of this process as well (i.e. requirements’ overlap caused in transposition of EU legislation into the Slovak legislative framework, which goes beyond of what is stated by the directive as necessary). Despite the fact that the Ministry of Labour justifies the adoption of the new regulation by the need to transpose the directive 2014/67, most of the new obligations for entrepreneurs do not originate from EU legislation.

Therefore, BRC, in accordance with its mission, carried out the Analysis of costs and benefits for SMEs, in which it came to conclude that 99 % of costs resulting from new obligations for entrepreneurs are caused by the effects of gold-plating.

In what concrete way does the regulation extend beyond minimum requirements?

  • Pursuant to the directive, liability of the purchaser of service in the Slovak Republic for non-payment of wage to visiting employee of the subcontractor should apply only to employees in the construction industry with an existing option for liberation. The Act in Slovakia states the strict liability for all cases without option for liberation.
  • Directive does not stipulate the obligation for a domestic entrepreneur to inform his domestic employee before his posting, in written form, about work conditions and employment conditions in the State, where he is about to be posted. The Slovak Act arbitrarily introduced this obligation.
  • Directive does not oblige a domestic entrepreneur to enter into a written agreement with a domestic employee before his posting. The Slovak Act also arbitrarily introduced this obligation.
  • Entrepreneur's strict liability upon receiving a work or service from illegally employed person by service provider or work contractor, does not originate from the directive. This obligation is again arbitrarily introduced by the Slovak Act, which brings great amount of bureaucracy in the form of new administrative tasks, the threat of heavy fines up to 200 000 € and a potential for serious disruption of business relations between entrepreneurs.

In light of the results of this analysis, BRC elaborated proposals for measures to reduce the regulatory burden on SMEs. A full analysis of costs and benefits for SMEs is published on our website here.

Higher payments to RTVS will cost SMEs 3.5 million € per year

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Higher payments to RTVS will cost SMEs 3.5 million € per year

The Better Regulation Center as a representative of the Slovak Business Agency in the Permanent Working Commission of the Legislative Council of the Government of the Slovak Republic for Assessing Selected Impacts expressed strong disapproval in reaction to the upcoming proposal made by the Ministry of Culture of the Slovak Republic, which amends Act No. 340/2012 Coll. on Payments for Public Services provided by the RTVS. The two controversial points of the proposal were:

  1. Raising the rate of RTVS payments by 50% imposes additional burden on SMEs equalling 3.5 million €.
  2. Stipulation of legal authority for the Ministry of Culture of the Slovak Republic to adjust the rate of RTVS payments in future by a ministerial decree.

Therefore, the BRC in accordance with its mission to reduce excessive regulatory burden on SMEs and thereby improve business environment in Slovakia, proposed, among other alternatives, an absolute exemption for SMEs from the payment of those charges and the full state financing to the RTVS budget.

According to BRC and based on historical experience, rate adjustment of RTVS payments by form of a ministerial decree could lead to regular rate rises of RTVS payments exactly like in 1995 and 1997, when the ministerial decree stipulated the rate, which increased twice in a short period of 4 years. Furthermore, this process wouldn't be any longer subjected to the standard legislative procedure, on the contrary, the Minister of Culture could take such a change directly „from the table“, without the involvement of the public in the consultation and parliamentary debate. As a result, consultations with businesses as well as the SME Test, based on the Uniform Methodology for Assessing Selected Impacts, would be completely ignored.

The BRC participated in consultations with business entities, in which the aforementioned objections, as well as alternative proposals, were presented. BRC has also carried out an SME Test, which is a mandatory part of the Impact Analysis on the Business Environment, to quantify the financial costs of the regulation.

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